TNAG-0767-FCO40-971-Supplies-of-electrical-power-for-Hong-Kong-Castle-Peak-power-1978 — Page 188

CONFIDENTIAL

BRIEF FOR PRIME MINISTER'S MEETING WITH SIR LAWRENCE KADOCRIE

Sir Lawrence Kadoorie has been in London to sign the $390m

Loan Agreement for GEC's contract for the Hong Kong power station. The Supply contract was signed on Saturday 8 April in Hong Kong. Mr Alan Williams, Minister of State for Industry, was present. After his visit to Europe, Sir Lawrence hopes to return via Peking to discuss with the Chinese authorities the supply of coal from China for the power station.

2. Sir Lawrence met Mr Williams in London on Thursday 13 April, the day after the Loan Agreement was signed. From this discussion it appears that Sir Lawrence will wish to raise two issues with

the Prime Minister:-

i

The scope for future British exports to Hong Kong. The Department of Industry is now preparing proposals for a further 700 MW generating capacity for the new power station and for the complete renovation of China Light and Power's main transrission system (the latter might provide over £100m worth of orders for UK switchgear, transformer and cable manufacturers). The Department hopes that UK industry will also obtain negotiated contracts, without international tender, for this work. There are several other major Hong Kong projects in prospect: electrification of the railway to Canton and, rather further ahead, a 2,000 MW power station which China Light and Power/Esso would like to place alongside the power station which GEC are now to build. In addition China Light will be carrying out a renovation of the rest of its transmission system.

Sir Lawrence may raise the question of the financing terms for the transmission system. During his stay Sir Lawrence has sought an assurance from the Government that exactly the same financing terms will be offered for the transmission system as for the power station.